Evening Star Pattern It’s powerful Bearish reversal pattern This indicates a potential change in the market direction from upward trends to downward trends. This classic candlestick formation is widely used by traders to predict trend reversal, especially after a sustained price gathering in higher time frames.
The stars in the evening are Three different candles:
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Big bullish candle: This candle occurs during uptrends and represents a strong upward momentum, indicating that it is under control by the buyer.
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A small indecisive candle: The second candle is usually a Spinning top or Dojirepresents the indecisiveness of the market. It shows that the upward momentum is weakening as buyers and sellers balance. It’s not uncommon to see the evening star patterns More than two A small indecisive candle at the top.
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Big bear candle: The third candle confirms the reversal by closing it down low on the indecisive candle by falling far below the midpoint of the first bullish candle. This means that the seller is taking control and the bearish trend may continue.
This candlestick formation usually forms at peaks of upward trends, providing an important signal for traders to predict bearish movements.
The importance of market context
It is important to understand when and where the evening star pattern is formed. Usually this pattern is displayed in a Mature uptrendsthe upward trend continues with multiple waves, exceeding the average Elliott wave sequence, with a reversal imminent. When an evening star pattern is formed before resistance Levels provide a more reliable signal with additional context.
Time frame for reliability
Daily time frame It is most reliable in the evening star pattern, as it removes much of the noise seen in the shorter time frame. However, the pattern is also displayed Daytime chartthese short time frames may produce false signals more frequently. Swing traders prefer daily or weekly charts to get a more reliable signal, while day traders can search for patterns in either an hour or four hour chart.
Common pitfalls when identifying evening stars
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Fake signal: In a choppy or horizontal market, evening stars may not predict a strong reversal, leading to false signals.
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Ignore the market context: It is important to use the evening star pattern in the right market context. It’s mainly after an uptrend. Using it in an integrated market can lead to misunderstandings.
The screenshot shows a scenario in which an evening star-like pattern is formed in the integration phase after the evening row. As we learned above, the context of the evening star pattern is incorrect.
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No trigger: In many cases, the evening star pattern will not be triggered if the third bearish candle is not completely closed under the indecisive candle. Traders may be tempted to trade too quickly when they see a third candle formed, but it is important to remember that the third candle must be completely closed before it can execute the trade.
Evening Star vs. Morning Star: Important Differences
on the other hand Evening Star It’s a bearish reversal pattern, and its counterpart. Morning Star Patterna Bullish reversal pattern. Both patterns share the same three-candle structure, but appear in different market contexts.
- Evening Star: Displayed after the uptrend and indicates a bearish inversion.
- Morning Star: Appears after a downtrend and indicates a bullish reversal.
Morning Star Form starts with a when the downtrend shows fatigue Big bear Candles followed by Indecisive A small candle, and then a Strong and strong Candles signal potential upward inversions. Both patterns complement each other with trading strategies and offer the opportunity to predict market reversal in both directions.
How to exchange candlestick patterns in an evening star
I trade normally Evening Star Pattern A step-by-step approach is required.
1. Check the trend
Make sure the evening star is formed after it is clearly defined Uptrend. If the market has been rising for a while, the pattern is likely to show a major reversal.
The chart below shows uptrend evening star patterns that have just completed the Elliott wave sequence, making it more likely that you’ll see bearish price movements.
2. Chart Context
Ideally, you are only looking for an evening star pattern at previous resistance levels, or look for demand zones for additional contexts. Patterns that occur in a strong chart context may have better signaling capabilities.
The evening stars in the chart below quickly form in the previous resistance area and supply zones, providing a powerful chart context.
3. Entry Points
Normally, traders do not exchange the evening star patterns directly, but use the bear signal of the evening star patterns to find trading opportunities in low time frames. This allows traders to take advantage of higher time frame bias with accurate entries for higher time frames.
Following the above signal, after the triangle pattern is broken, a lower time frame provides an entry signal.
Advanced Tips for Trading Evening Star Patterns
For more experienced traders, the evening star pattern can be enhanced using advanced techniques.
1. Combined with Fibonacci levels
use Fibonacci Retracement The level of identifying the main support and resistance zones can help to verify the strength of the inversion. If the third candle breaks through the important Fibonacci level, it is a stronger signal.
2. Please diverge and check
if rsi or Macd It shows divergence (for example, high prices but low RSI highs), indicating weaker uptrends, making the evening star pattern more reliable.
3. Continuous trading
Evening Stars also act as a continuation pattern of trends. An evening star pattern occurs at the top of the correction wave, which allows for a signal to follow a reliable trend.
4. Transactions in different time frames
The patterns can be applied to different time frames, but reliability varies. in Scalpingshort time frames (such as 5-minute or 15-minute charts) can generate signals, but they may be less reliable Swing Trading On daily or weekly charts.
Conclusion
Evening Star Candlestick Pattern It is a valuable tool for traders looking to take advantage of the market’s bearish reversal. The ability to signal trend fatigue is essential to predict market reversal. Evening Star Pattern is also a very high time frame bias filter, allowing traders to adopt a multi-time frame approach.
However, it is important to check the patterns with other indicators and backtest them on your demo account before trading live.
FAQ
Can I use the Evening Star pattern in all markets?
Yes, it can be applied to stocks, forex and crypto, but performance may vary depending on the market.
What is the difference between the evening star and other bear inversion patterns?
Evening Stars are certain three-candle inversion patterns, while other bearish patterns (such as bearish entrapment rates) have different formations and signals.
Is the evening star pattern reliable in a short time frame?
It may appear in a short time frame, but noise reductions usually make it more reliable on daily or weekly charts.
Can evening star patterns be formed in the horizontal market?
Evening star patterns are most effective when formed after a clear uptrend. In a horizontal or integrated market, this pattern does not lead to a significant price reversal and may increase the risk of false signals. For increased reliability, we recommend using this pattern only in trending markets.
How does candle size affect the evening star pattern?
Candlestick size can affect the strength of the pattern. The larger first bullish candle shows strong upward momentum, while the smaller two-second candle shows indecisiveness. The third bearish candle is large and close to the midpoint of the first, and you need to check for a strong reversal. Small candles and indecisiveness can lead to weaker patterns.
How often do evening star patterns appear on the market?
Evening star patterns do not appear frequently as they require certain market conditions: pre-upward trends, momentum changes, and clear inverted signals. However, it tends to occur more frequently Acquired markets If there is a high possibility of price fatigue.
Should I wait for confirmation before trading the Evening Star Pattern?
Some traders enter right after the third candle, but await additional confirmations (checks from lower time frame signals, such as breaks below the main support level, and indicators such as RSI and MACD) can reduce the risk of false signals. This confirmation increases the chances of successful trade.
